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Blowout jobs report puts ball back in Fed's court

Five key numbers from October jobs report

While there are still 40 days and a minefield or three to negotiate until the next Federal Reserve meeting, traders already believe they know what's going to happen.

Friday's nonfarm payrolls report, which showed the economy created 271,000 new jobs in October while the unemployment rate fell to 5.0 percent, fueled what has been a dramatic turnaround in expectations for monetary policy.

Traders now are pricing in a 70 percent chance of the first rate hike in more than nine years at the Dec. 15-16 Federal Open Market Committee meeting. Just a month ago, the probability was barely 5 percent, and it was about 33 percent as of the September FOMC meeting.

If conditions stay amenable to a hike, it will mark the beginning of a new era for investors. Financial markets have enjoyed a funds rate anchored near zero from a central bank that also injected $4.5 trillion in liquidity through its quantitative easing program that ended in October 2014.

Fed Chair "Janet Yellen has to be breathing a huge sigh of relief," said JJ Kinahan, chief strategist for TD Ameritrade. "Think back to June or July: How many times did she say we're going to raise rates in 2015?(The payrolls report) is making her look brilliant."

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